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18 Oct | SuperGroup – That’s the Clothing Retailer

Use the word Supergroup around someone of my age and it’ll no doubt conjure up images of men in sequined spandex with substantial bouffants strutting around stage, backed by a tottering stack of Marshalls the height of a housing estate.

Even the Google alert I’ve set up to track any newsworthy online utterings of the term ‘Supergroup’ tends to return more headlines on wannabe rockers than a certain UK clothing retailer.

But I digress. Usually I digress.

The Supergroup to which this article refers is in fact Supergroup PLC. A nifty little FTSE 350 company that sells clothing under a number of brands – predominantly Superdry and Cult – that after a shaky start-to-mid 2012 has certainly turned things back around (price wise) in the past three months.

Here’s the blurb from the Supergroup website:

SuperGroup is a distinctive branded UK fashion retailer offering quality clothing and accessories. It operates a multi-channel business through a combination of Cult and Superdry standalone stores, Superdry concessions, e-Commerce and its UK and International Wholesale operations.

The business was founded in 1985 and has since been developed to design and sell a wide range of premium men’s and women’s clothing under its flagship brand, Superdry, together with other own brands and a number of third-party products sold in its Cult stores. Superdry offers an international brand proposition targeted at discerning customers who are looking for stylish clothing that is uniquely designed and well made.

SuperGroup currently has 105 UK and European standalone retail stores, 70 UK and 52 international concessions and globally, 122 franchised and licensed stores. Superdry is now sold worldwide in 54 countries via the franchised and licensed network and in 101 countries via its websites.

So we took a little spread bet action out, going long on Supergroup until December 2012 for a quid a point at 653.72 pence. We’ve slapped a stop in place at 545 pence limiting any potential losses to a little over 100 quid. I told you I’d changed my ways.

Why do I like Supergroup? To be honest I’ve liked their gear for a while. With my fashion sense, perhaps that’s not a recommendation they want to take to press but I find liking a company and what it does certainly makes for a comfy investment.

Of the screening process I blathered on about earlier in the month, Supergroup nailed 10 of the 11 criteria, narrowly missing out on our positive free cash flow test. So we’ve already ticked lots of basic boxes in relation to value, growth, liquidity, gearing and profitability.

Then there’s the chart below that I’m sort of hoping will continue on through December – that’s what retailers do right? They sell lots of stuff in the lead-up to Christmas? Here’s hoping.

And as for that little x-factor (is anyone else monumentally pissed-off that bad reality television have stolen the terms x-factor and big brother from we, the common folk) that usually prompts me to pull the trigger on an investment, how about Supergroup’s expansion into new territories such as the Middle East and North Africa.

This from their Q1 Interim Management Statement:

Following the recent franchise deal in India, the Group is pleased to announce that it has recently completed a five-year deal with Azadea Group Holding SAL, a significant franchise operator across the Middle East and North Africa, to open stores across Lebanon, Egypt, Qatar and Bahrain.

The portfolio of franchised stores has increased by 13 during the quarter to 102; six stores were opened in Spain and one in each of Greece, France, Georgia, Saudi Arabia, Jordan, Venezuela and South Africa.

So Supergroup will do it’s retail thing in the lead up to Christmas and that share price will continue its northern trajectory, or my name’s not Paul Stanley.

Thanks again for dropping by.